UPS 2009 Annual Report POISED FOR THE UPS 2009 ANNUAL REPORT 55 Glenlake Parkway, NE Atlanta, GA 30328-3474 30% www.ups.com © Copyright 2010 United Parcel Service of America, Inc. UPS, the UPS brandmark, and the color brown are trademarks of United Parcel Service of America, Inc. All rights reserved. 100235_CVR.indd 1 3/3/10 4:05 PM Investor Information website at www.investors.ups.com or at the Securities and Exchange Commission website, www.sec.gov. The Annual Meeting Form 10-K also is available free of charge by calling, con- Our annual meeting of shareowners will be held at tacting via the website, or writing to the Investor Relations 8:00 a.m. on May 6, 2010 at the Hotel DuPont, 11th Department. and Market Street, Wilmington, DE. Shareowners UPS Shareholder Services of record as of March 8, 2010 are entitled to vote For convenient access 24 hours a day, seven days at the meeting. a week: Investor Relations Class A Common Shareowners: You can contact our Investor Relations Department at: www.bnymellon.com/shareowner/equityaccess UPS 888-663-8325 55 Glenlake Parkway NE Class B Common Shareowners: Atlanta, GA 30328-3474 www.bnymellon.com/shareowner/isd 800-877-1503 or 404-828-6059 800-758-4674 investors.ups.com Calls from outside the United States: Certifications 201-680-6612 UPS has included as Exhibits 31.1 and 31.2 to its Annual TDD for hearing impaired: 800-231-5469 Report on Form 10-K filed with the Securities and TDD for non-U.S. shareowners: 201-680-6610 Exchange Commission certificates of the Chief Executive Officer and the Chief Financial Officer certifying the compli- Direct Stock Purchase Plan ance of UPS’s public disclosure with applicable standards. To make an initial purchase of Class B shares go to In addition, the Chief Executive Officer certified to the www.bnymellon.com/shareowner/isd and select Invest- New York Stock Exchange on May 22, 2009 that he was ment Plan Enrollment to access the “Enrollment Wizard.” not aware of any violations by UPS of the New York Stock Current Class B shareowners can enroll in Exchange corporate governance listing standards. the plan by accessing your account through Exchange Listings www.bnymellon.com/shareowner/isd or Our Class B common stock is listed on the New York Stock calling 800-758-4674. Exchange under the symbol “UPS.” Dividend Reinvestment Plan Transfer Agent and Registrar To reinvest dividends in the purchase of additional BNY Mellon Shareowner Services UPS shares: Send notices of address changes or questions regarding Class A shareowners: account status, stock transfer, lost certificates, www.bnymellon.com/shareowner/equityaccess or dividend payments to: United Parcel Service, Inc. Class B shareowners: c/o BNY Mellon Shareowner Services www.bnymellon.com/shareowner/isd UPS is the world’s largest package delivery company, a leader in the U.S. P.O. Box 358415 Pittsburgh, PA 15252-8415 Online Access to Shareholder Materials You may receive shareowner information electronically. or To enroll, follow the MLink® enrollment instructions when 480 Washington Boulevard you access your UPS Class A or Class B shareowner Jersey City, NJ 07310 account via the Web addresses above. important websites Form 10-K Investor Relations investors.ups.com Our Annual Report on Form 10-K for the year ended UPS Corporate ups.com December 31, 2009 is part of the UPS 2009 Annual Report. Sustainability/Corporate Responsibility responsibility.ups.com If you would like an additional copy of our Form Services and Solutions businesssolutions.ups.com 10-K, you can access it through the Investor Relations 100235_CVR.indd 2 3/1/10 5:40 PM We provide advanced solutions around the globe UPS offers time-definite delivery of letters, documents, and small packages via air and ground services to more than 200 countries and territories around the world. UPS Supply Chain Solutions® features forwarding and logistics services in more than 175 countries and territories. Supply chain design and management Domestic and international air freight Ocean, rail, and ground freight Transportation network management Customs brokerage, mail services UPS Freight® provides long-haul truckload and less-than-truckload (LTL) freight services in the United States, Canada, Mexico, Guam, Puerto Rico, and the U.S. Virgin Islands. Financial Highlights Operating Highlights (in millions except for per-share amounts) 2009 2008 Generated $4.1 billion in free cash flow** in the Revenue $45,297 $51,486 worst economic environment in 70 years . Operating expenses 41,496 46,104 Invested for the future through acquisitions, Net income 2,152 3,003 infrastructure, and new products. Maintained the highest levels of service, despite Adjusted net income* 2,316 3,578 package volume declines. Diluted earnings per share 2.14 2.94 Generated the highest operating margins in the Adjusted diluted earnings per share* 2.31 3.50 small package industry. Dividends declared per share 1.80 1.80 Continued our sustainability initiatives through community support, responding to global disaster Assets 31,883 31,879 relief needs, and efforts to reduce our impact on the Long-term debt 8,668 7,797 environment. Shareowners’ equity 7,696 6,780 Capital expenditures 1,602 2,636 Cash and marketable securities 2,100 1,050 less-than-truckload industry, and a global leader in supply chain management. UPS Facts Founded: 1907 Worldwide operating facilities: 2,880 Employees: 408,000 Retail access points: 62,000 Customers: 7.9 million 2009 packages delivered: 3.8 billion Daily online tracking requests: 22.4 million *See ”Items Affecting Comparability” on pages 20-21 of our Form 10-K. **See page 7 for our calculation of free cash flow. 100235_TXT.indd 1 3/2/10 5:33 PM R e p o r t A n n u a l 2 0 0 9 UPS D. Scott Davis Chairman and Chief Executive Officer ON OUR FOCUS BUSINESS “We took the necessary steps to manage the business well, while focusing on the long-term health of our company.” 02 100235_TXT.indd 2 3/2/10 5:33 PM UPS 2 0 0 9 A n n u a l Dear Shareowners, R e p o r t The economic outlook for 2010 is considerably brighter than it was a year ago. However, recovery from this recession will be gradual and vulnerable to setbacks until unemployment begins to decline. UPS has managed through 21 recessions and one and included: depression in our 102-year history. We applied the les- Expanding Worldport, our largest international air sons learned in our past to guide the business through hub, in Louisville, KY, which will enable us to process the recent economic turmoil. And we took the neces- 416,000 packages per hour when phase two is com- sary steps to manage the business well, while focusing pleted in 2010, and optimize our network by flying on the long-term health of our company. fewer, larger, and more efficient aircraft. Continuing with construction of an international air UPS implemented unprecedented and comprehensive hub in Shenzhen, China, slated to open in the first cost management initiatives in 2009. These initiatives quarter of 2010. included network changes as well as organizational Acquiring our service agent in Turkey and establish- and structural realignments intended to make UPS a ing a joint venture in Dubai, United Arab Emirates, more efficient organization. In addition we significantly to capitalize on that area’s growing importance as reduced capital expenditures without hampering a transportation bridge and sourcing location for development of growth opportunities. UPS achieved Europe and Asia. cost savings of nearly $1.4 billion, while attaining Opening 365,000 square feet of dedicated facilities service levels that were the best in our history. These in The Netherlands and Puerto Rico to meet the spe- achievements occurred without reducing our service cialized supply chain needs of the healthcare sector. footprint. Adding 300 new compressed natural gas vehicles to what is already the country’s largest private fleet of Even with the pressures of a severe recession, UPS alternative fuel vehicles in the industry. maintained its outstanding financial position. In 2009, the company again generated superior free cash flow, Our affiliation with the international Olympic Games, producing $4.1 billion.* UPS also held its dividend begun in 1996, has broadened our brand recognition in at 2008 levels, marking 40 years of maintaining or the global community. In 2009, we were honored and increasing dividend payments, and increased the divi- excited to be selected to manage the transportation dend in the first quarter of 2010. and logistical operations of the London Olympic Games in 2012. This entails responsibilities similar to those we Despite the heightened focus on cost control, there executed for the Beijing Olympic Games during 2008. was no question that we would continue to make strategic investments for the long term. In 2009, In addition to significant investment in global infra- our investments for growth spanned the globe structure and market penetration, UPS also extended *See page 7 for our calculation of free cash flow. 03 100235_TXT.indd 3 3/2/10 5:33 PM R e p o r t its broad portfolio of products and services. Notable new offerings included: A n n u a l Initiation of domestic express pickup and delivery 2009 Revenue by Segment services in 22 additional countries, bringing the 2 0 0 9 total to 55. Expansion of the early morning delivery territory in UPS the United States to more than 23,000 ZIP Codes. 17% This means UPS delivers early to more businesses than any other carrier. Introduction of door-to-door pickup and delivery for all UPS Freight services between the United States, 21% 62% Canada, and Mexico.